The Things Every Policy holder Ought to Know About Subrogation
Subrogation is a term that's well-known among insurance and legal companies but often not by the people they represent. Rather than leave it to the professionals, it is in your self-interest to comprehend an overview of the process. The more information you have, the more likely an insurance lawsuit will work out in your favor.
Every insurance policy you own is a commitment that, if something bad happens to you, the company on the other end of the policy will make good in one way or another in a timely fashion. If your vehicle is hit, insurance adjusters (and police, when necessary) decide who was at fault and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is typically a time-consuming affair – and time spent waiting often increases the damage to the policyholder – insurance firms often decide to pay up front and figure out the blame afterward. They then need a method to recover the costs if, ultimately, they weren't actually in charge of the expense.
For Example
Your garage catches fire and causes $10,000 in house damages. Happily, you have property insurance and it pays out your claim in full. However, in its investigation it finds out that an electrician had installed some faulty wiring, and there is a reasonable possibility that a judge would find him to blame for the damages. The house has already been repaired in the name of expediency, but your insurance agency is out all that money. What does the agency do next?
How Does Subrogation Work?
This is where subrogation comes in. It is the way that an insurance company uses to claim payment when it pays out a claim that turned out not to be its responsibility. Some insurance firms have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your person or property. But under subrogation law, your insurance company is considered to have some of your rights for having taken care of the damages. It can go after the money originally due to you, because it has covered the amount already.
Why Should I Care?
For a start, if your insurance policy stipulated a deductible, your insurance company wasn't the only one who had to pay. In a $10,000 accident with a $1,000 deductible, you have a stake in the outcome as well – to the tune of $1,000. If your insurer is lax about bringing subrogation cases to court, it might choose to recoup its costs by increasing your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after those cases enthusiastically, it is acting both in its own interests and in yours. If all is recovered, you will get your full deductible back. If it recovers half (for instance, in a case where you are found 50 percent at fault), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total loss of an accident is over your maximum coverage amount, you may have had to pay the difference, which can be extremely spendy. If your insurance company or its property damage lawyers, such as car accident attorney Norcross GA, successfully press a subrogation case, it will recover your costs in addition to its own.
All insurance agencies are not created equal. When comparing, it's worth measuring the reputations of competing agencies to evaluate whether they pursue legitimate subrogation claims; if they resolve those claims with some expediency; if they keep their clients updated as the case goes on; and if they then process successfully won reimbursements immediately so that you can get your deductible back and move on with your life. If, instead, an insurer has a record of paying out claims that aren't its responsibility and then safeguarding its profit margin by raising your premiums, you'll feel the sting later.